Call Kurtis Investigates: Banks Not Paying Taxes On Some Properties Seized In Foreclosure

STOCKTON (CBS13) -- Some of the same banks that foreclosed on homes up and down the valley are now skipping out on paying their property taxes, a Call Kurtis investigation has uncovered.

While local counties lay off workers — unable to pay for the services they once could — Call Kurtis found more than $3 million dollars in back taxes and penalties on properties owned by the banks, according to tax collectors in six Northern California counties.

CBS13 received records of delinquent and defaulted properties from Sacramento, San Joaquin, Stanislaus, Yolo, Placer and El Dorado counties -- finding more than 600 residential and commercial bank-owned properties owing money to the counties.

It's money some like Marites Recosana said would help them collect benefits like food stamps in the midst of a financial crisis and high unemployment.

"You can't find a job even though you want to go to work," Recosana said.

Recosana said she struggles to feed her family.

"It's really hard," she said. "Sometimes we get in line at the food bank."

Recosana applied for government assistance but was told she will have to wait -- San Joaquin County is currently slower than usual in processing claims, after layoffs resulting largely from address a decrease in tax revenue.

"They said to give them a month," she said. "A month? It's gonna be a month Saturday and we haven't heard nothing."

Recosana, who raises two kids alone, said it leaves her family in limbo.

Counties across the region have been forced to make harsh cuts to health and human services, law enforcement and the courts because money just isn't there.

San Joaquin County Treasurer-Tax Collector Shabbir Khan said revenue is down -- largely due to a dip in property taxes from lower property values.

"Sales tax and property tax are the big portion of general fund," he said.

San Joaquin County alone has eliminated more than 800 positions since the economy soured — mostly through retirement and layoffs.

But a CBS13 Call Kurtis investigation has uncovered millions of dollars owed that could help desperate counties restore some services.

Some of the same banks that foreclosed on homes because they weren't being paid are now not paying their property taxes.

"It is a slap in the face, an absolute slap in the face," said housing advocate Vivian Richardson, a member of the Alliance of Californians for Community Empowerment.

"It is absolutely ridiculous," she said. "It's frustrating as hell."

Banks owe Sacramento County more than $303,000 in property taxes and penalties, according to data received from the county in January.

In Stanislaus County, that number is about $162,000.
And as of November, banks owed San Joaquin County more than $760,000.

The money owed in these six counties adds up to more than $3 million in unpaid property taxes and fees.

The money owed in San Joaquin County alone could pay the salaries of 12 sheriff's deputies, 19 county construction workers or 22 case workers at Health and Human Services — which would help process food stamp cases like Recosana's.

"Banks foreclosed on these properties because people were not paying their bills," reporter Kurtis Ming said to Beth Mills of the California Bankers Association. "Now [the banks] are not paying their bills. Is there a double standard?"

"I don't think so," Mills said.

Mills said banks are committed to paying the money they owe.

She blamed some of the delinquencies on simple clerical errors that can occur either at the county or the banks, but also said banks shouldn't be stuck paying the property taxes accrued before a foreclosure.

"It's the homeowner's responsibility," she said.

"You think the county should be going after the homeowners who were foreclosed upon for that money? " Ming asked.

"Correct, they were the owners of the property at that point," she said.

But three county tax collectors told CBS13 the property tax debt transfers with the property, meaning banks that foreclose are stuck with the bill.

"I can't speak for them why they're not paying for it, but that's their business decision," Khan said.

Counties can place liens on properties, preventing a bank from selling a home until the debt is paid off. After five years, counties can auction properties off.

"If I'm not going to church, I don't think I'm going to be here," she said.

For now, Recosana said her faith and the food bank are keeping her alive.

The clock is ticking, as she waits for the county to get to her case.

"I tell my kids to just be happy of what we have," she said. "Because probably some people cannot eat."

Despite the numbers, the majority of banks do pay their property taxes, and most properties owned by banks are current on taxes as well.

CBS13 found the most well known banks like Wells Fargo, Bank of America, US Bank and JP Morgan Chase had relatively few delinquencies.

Statements
While hundreds of banks were on county tax rolls, CBS13 reached out to many of the major banks for comment on this story. Some of them provided comments for inclusion in this story.

Bank of America
"Bank of America strives to pay property taxes prior to them becoming delinquent to ensure that our homeowners and investors are protected from delinquent property tax repercussions," a spokesperson said. "In 2012 alone, Bank of America paid $235 million in property taxes combined to these five counties out of impound accounts on behalf of our customers. We also advanced three million dollars on behalf of homeowners who did not pay their property taxes. We have already reached out to many of these counties and begun researching the delinquencies. As we determine that it is the bank's responsibility, we will pay the taxes owed. Otherwise, we will help the counties identify the responsible party."

Delta National Bank
"There may be balances owed that were, for the most part, inherited by Delta when Delta took the property back through foreclosure," attorney Bart Barringer said. "As you know, property values have declined drastically in the Northern San Joaquin Valley over the past 7-8 years and one of the things Delta has to do when it gets properties back is to go to the tax assessor of each county to try and determine the fair market value of said properties since the defaulting borrower did nothing to try and reduce their taxes even though the property declined by as much 2/3 in fair market value. Delta will be responsible for some taxes on those properties, but Delta is seeking, and will continue to seek, to have those tax amounts lowered to reflect the fair market value of those properties and to pay what is rightfully owed. This is a fairly long and drawn out process with the Counties as they have to compare the properties with like properties and sales to determine how much to lower the taxes."

JPMorgan Chase
"Our preliminary research into these properties indicates that there is not one Chase-owned property on the list for which we have not paid property taxes," said spokeswoman Eileen Levickis. "Although we may be listed as the mortgage servicer, the majority of properties on the list you forwarded are not owned by Chase, but rather, by the investor. For example, if Chase were servicing the mortgage for a property that was foreclosed, ownership of the property is then transferred to investors such as Fannie Mae or Freddie Mac."

Wells Fargo
"Wells Fargo can check the status of a property to determine who is responsible for the maintenance, taxes and general upkeep," said spokeswoman Julie Campbell. "We are aggressively looking into this situation and will do our best to resolve the matter."

US Bank
"As trustee, we have no ownership or authority over any of the individual loans in the trust -- that is the role of the servicer for each loan," said spokeswoman Teri Charest, referring to many properties for which US Bank is listed as a legal owner for a trust. "The servicer would be the one responsible for making tax payments and any other activity specific to the individual properties."